"My base case is for Bitcoin to perform very well over the next 2 years, but we'll see. Saylor has invested over $1.1 billion in bitcoin as MicroStrategy's corporate treasury reserve.Īlden, who was initially skeptical about bitcoin, bought into the digital asset in April 2020 at around $6,900 per coin. Michael Saylor, the chief executive of software company MicroStrategy, bought another 314 bitcoins for $10 million, bringing the firm's total holdings to 70,784 bitcoins, according to a Friday regulatory filing. "Because if you were to listen to the bitcoin bulls, it's still fairly early on in its adoption cycle and that it could become several times larger before the volatility would go down and perhaps resemble more like gold or silver." 3 reasons to remain bullishĪmid the volatility and price decline, some investors are buying the dip. "The actual cost basis where people bought their coins has generally become a little bit more stable each time, although it still is significantly volatile," she said. If investors monitor that ratio, they would notice that bitcoin's volatility has reduced in every four-year cycle. "And looking at the price at which they moved, you can kind of come up with a cost basis of when the system has moved, and then compare that to the market cap." "The realized cap is basically the weighted average of looking at the blockchain and seeing when coins last moved," she said. She believes that one of the best ways to measure bitcoin's volatility is by comparing its market capitalization to its realized capitalization, which refers to the realized value of all bitcoins in the network, according to data firm Coin Metrics. In Alden's view, bitcoin's volatility has been reducing over time, but investors would not notice that by looking at its drawdowns, which measure the peak-to-trough decline during a specific period for an investment. "But then people that are investing in it are basically expecting that it'll become more widely distributed, more broadly owned, and that its volatility will go down over time." Bitcoin's volatility reduction over time "Bitcoin is still in that earlier phase of its adoption cycle, so it has more risk, it has more volatility," she said. But bitcoin is still far from entering into the mass adoption phase or the maturity phase, Alden said. The discovery, which began with early adopters and retail investors, has gained significant institutional support in 2020. "It's basically a whole new asset class," she told Brett Messing of SkyBridge in a recent SALT Talks interview, "and it's currently in the price discovery phase where the whole world kind of discovers what is this thing worth." "The 2017 bull-run for the asset had several corrections of over 30% during an otherwise very strong year," she explained, "so this correction continues to be in line with (and so far slightly below) its historical volatility profile, including during bull markets."īitcoin's volatility has made a lot of investors question whether it can be a store of value, but Alden views the digital token as "an emergent store of value." A number of indicators were showing that it was near-term overbought at around $40,000," Lyn Alden, founder of Lyn Alden Investment Strategy, told Insider in an email.Īlden believes that this correction "let out the excess euphoria and cleaned up some leveraged positions." "Bitcoin has been in a multi-week correction, which is normal for this point in its supply-halving cycle. This story is available exclusively to InsiderĪnd start reading now. Account icon An icon in the shape of a person's head and shoulders.
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